From the Top: Q & A with Klaus Andersen

Dec 16, 2008

Chief Executive Officer Klaus Andersen shared his insight into the business of Veolia Water Solutions & Technologies (VWS) at WEFTEC.08. At his company, Andersen heads VWS 6, which covers the Americas and Australia.

[VWS 6 includes the division's most recent acquisitions of AnoxKaldnes and Biothane as well as Krüger, Whittier Filtration, John Meunier, Crown Solutions, HPD, N.A. Water Systems, and the VWS offices in Mexico, South America, and Australia.]

How did you get your start in this field? What is your background?
I've been in water all my career. So from that aspect, I've just stayed within my field for 20-years plus. I originate out of Denmark.

I actually have been here before; I lived in United States some 15 years ago. Krüger Inc. was established by Krüger Denmark, and I was working for Krüger Denmark. Krüger was bought by Veolia starting in '91 and that's how I got involved in this field of work.

Back then, I actually started as an R&D engineer. I've done engineering work in mathematical models, modeling wastewater treatment plants, but then I got to come here and it was more sales -- being part of a team, starting a company up. It has been sales or management ever since in positions in Germany, Denmark, and Asia, too.

[Andersen received his master's of science degree in environmental engineering from the University of Aalborg in Denmark.]

How long have you held your current title?
As of the first of January this year [2008]. I was in a similar position but a different territory in Northern Europe, the Baltic region, and Spain, previously.

• 7,741 employees of which 60 percent are researchers, engineers, or project managers

What is your company's strength in the industry?
There are three strengths:

• flexible business approach,

• our unique technologies, and

• our people.

Veolia delivers its services in many different business models depending on where we are -- in the world or even within the United States or the market segments we're in. I think that's actually a key feature of Veolia and especially Veolia Water Solutions & Technologies.

To take an example here in the United States: in the municipal activities, we supply technologies and key process equipment and work the traditional way with the consultants specifying and us bidding into the consultant's specs. In industrial activities, we work inside as a contractor and provide technologies and high-purity standards equipment and related services.

We really are a company that can be difficult to get your head around because, depending on where we are, we approach the client in different ways. We like to believe that we are flexible in the way we manage our business and the way we approach the customer.

We have chosen to have different corporate identities throughout the world. We have Krüger Inc., HPD in Chicago, we have N.A. Water Systems. We have different legal entities, each addressing their market segment or each with their unique technology. We have chosen to maintain that, because we believe that we maintain closeness to the customer, we maintain motivation by our people. Of course there's a challenge getting the market to understand that we're all a part of Veolia Water Solutions & Technologies, but I guess that's part of my job.

Veolia Environnement, which is our parent company, has four divisions, water being one of them, and it is actually the original foundation of this company. And then we have Energy, Environmental Services, and Transportation.

It's important to understand that these four divisions, at the core, are a service company. But the water division has both the service arm with the operations people and then they have us, Solutions & Technologies. And the name was chosen with some deliberation. We do supply solutions and technologies. We're really a technology company, we have unique processes, technologies, and we like to combine them in solutions for the customer, and then we deliver them in all shapes and sizes -- meaning we can wrap them differently. We can do it as a solution provider or equipment supplier. So even in our little company, Solutions & Technologies, we can approach the client in many different ways.

We don't have one business model; we have a number of business models that we can apply depending on the market.

We also are a company of engineers and all that goes along with that. Our people are a very talented bunch. I have Region 6. This division is the Americas plus Australia, but that is just one part. The whole Veolia Water Solutions & Technologies is close to 8,000 people, by far the biggest player in the market.

What are some of the opportunities you are pursuing -- expansion, R&D, new products or services?
I think that energy is on the agenda in this country, both from the dollars and cents perspective and also on the political agenda -- gaining more energy independence. That will lead to activities within energy optimization and energy conservation. The technologies that we have play extremely well into that. Both because of our European roots, but also we have done a number of acquisitions that play into that.

Biothane -- That's a group of people based in Philadelphia that does anaerobic conversion of organic matter. Rather than inject air to remove it, we design and provide an environment [anaerobic conditions] that cultivates microorganisms that can convert organic matter to gas, which again can be converted into electricity -- without having to inject air, which costs energy.

We would like to get to the point where we have energy-neutral wastewater. The sludge treatment part of that, when you do liquid treatment, contrary to most belief, nothing disappears up into thin air, except nitrogen gas. You do create a byproduct -- sludge that can be converted into energy. The challenge for us is to capture that energy. I guess we could talk about resource recovery rather than of wastewater treatment. I'm confident that will be in the agenda going forward.

This time in the U.S., since coming back, I hear a lot more appreciation of the technologies required to capture this energy source. We feel we are very good at assisting the consultants or the end user to design these facilities. This is one thing that makes me confident, even in these gloomy days.

We also are manipulating microbiology. Anox Kaldnes, out of Sweden, is the undisputed leader in microbiology in population dynamics. When we talk about activated sludge, we have a big soup of bacteria. Another approach is called fixed film that has carriers on which bacteria grow. You can combine these, and you have the carriers and the specialized biofilm. This is what Anox Kaldnes is about. Because you have fixed film you can make sure your bacteria doesn't go anywhere.

If the money gets tighter, typically you want to utilize existing resources or infrastructure better rather than build new. That carrier technology-- MBBR --lends itself very well to retrofitting. You already have the tankage there, so you put carriers into existing tankage to get more biomass per gallon and, hence, you can treat more flow.

What are some of the challenges of the present economic situation?
In the short run -- this year, next year, I'm not too worried. We have a healthy backlog, looking at some pretty big orders. The immediate future, I'm not concerned. I would be very arrogant if I didn't have my concerns however.

I think there is always going to be a need for water. What I hear in the political discussions is they want to focus on energy. I think that having unique technologies is a good strategy rather than having commodity items. We don't. We're a technology company. So I think I am as confident as I can reasonably be.

Who do you consider your competitors?
Globally, GE and Siemens. There's a long list; the industry is very fragmented.

GE: It's very important that we distinguish where we are in the world. Here in United States, they have high purity water systems, they have their membrane systems. Here in the United States, they work more as a systems supplier. Other parts of the world they operate as more of an equipment supplier. But they are definitely one of our competitors.

Siemens is pretty obvious; we kind of gave birth to them, selling off our USFilter business. I respect them a lot, they are professional company, and I welcome their competition anytime.

It's a very fragmented industry: there are a lot of mid-sized and small companies, very local, very regional. The competitive situation we have in Brazil is very different from Argentina, different from Mexico, different from Canada. These are all local players. That's one of the advantages we have of maintaining identities -- we are also perceived as being local, and indeed we are, because our local subsidiaries are in charge of servicing the local customers but tapping into a global knowledge. It's my job to make sure that they are servicing local customers and putting in front of them the wealth of knowledge we have.

How is your company responding to the push for sustainability?
As I said before, we are working in energy. Also in water reuse. We have municipal facilities that treat their water to such a degree that it is being used as boiler makeup water. Water reuse or water reclamation, I think, will have even more emphasis going forward.

Sludge management practices. A lot of sludge is being land applied and used as fertilizer. A number of countries around the world are putting a question mark behind that. Not that they can point to concrete or specific examples of health risk, but they don't want to take the chance. And I think there is growing interest to use it as an energy source. One country that I know of very well – Denmark -- is now putting tax incentives in order to use sludge as an energy source. There are countries in Europe, Switzerland, and some states within Germany that are banning the land application of sludge.